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en-usTechdirt. Stories about "livewire"https://ii.techdirt.com/s/t/i/td-88x31.gifhttps://www.techdirt.com/Fri, 16 Dec 2016 14:34:25 PSTTeam Prenda Finally Goes To Jail: Hansmeier & Steele Indicted & ArrestedMike Masnickhttps://www.techdirt.com/articles/20161216/14262736298/team-prenda-finally-goes-to-jail-hansmeier-steele-indicted-arrested.shtml
https://www.techdirt.com/articles/20161216/14262736298/team-prenda-finally-goes-to-jail-hansmeier-steele-indicted-arrested.shtmlPrenda Law -- a legal operation set up to file tons of shakedown copyright infringement lawsuits in an effort to get as many people as possible to just pay up and settle. The scam got deeper and deeper the more you looked, including forged signatures, clear evidence that the main actors behind Prenda -- John Steele and Paul Hansmeier -- were uploading their own works as a honeypot, while pretending to represent clients that they themselves owned through various shell companies -- which they denied owning. It went on and on and on. And on and on and on. Things really went sideways almost four years ago when Judge Otis Wright in California was the first judge to put much of this together, and called all of them to court, where everyone pleaded the fifth (yes, lawyers were pleading the fifth in a case they themselves brought). In response, Judge Wright referrred the case to law enforcement, leading many people to ask over the past four years how it was these guys weren't in jail (and, in fact, they continued to file lawsuits, reprising the same scheme but with ADA shakedowns.

Court after court after court has slammed Prenda, and ordered Hansmeier and Steele (partner 3, Paul Duffy, died in the middle of all of this) to pay up lots of money. Of course, in response to that, there were further accusations of illegally hiding money, bogus trusts, a questionable bankruptcy claim and more. And, yet, they still were not in jail. Oh, and we didn't even mention the various ethics investigations that recently suspended Hansmeier's license.

Ken "Popehat" White -- who as a former Assistant US Attorney and current criminal lawyer -- has kept saying that the wheels of justice turn slowly, but they do turn. Back in May, White noted that it appeared that ofifcials were getting mighty close to filing charges against Hansmeier and Steele, based on some evidence he had seen, suggesting the investigation was wrapping up. And the wheels continued to turn... until earlier today when it was revealed that Steele and Hansmeier have both been indicted and arrested in connection with the Prenda scam.

You can read the indictment or Ken White's excellent analysis of it. As White notes, the indictment is incredibly thorough. We've written about a number of indictments in the past in which law enforcement is fairly lax on details. This is not one of those cases. The overview gives a really good summary of everything:

Between 2011 and 2014, defendants Paul R. HANSMEIER and John L.
STEELE orchestrated an elaborate scheme to fraudulently obtain millions of dollars in
copyright lawsuit settlements by deceiving state and federal courts throughout the country.
In order to carry out the scheme, the defendants used sham entities to obtain copyrights to
pornographic movies--some of which they filmed themselves--and then uploaded those
movies to file-sharing websites in order to lure people to download the movies. To learn
the identities of the people caught in the trap they constructed, HANSMEIER and STEELE
filed specious copyright infringement lawsuits and fraudulently procured permission from
courts to send subpoenas to internet service providers for subscriber information associated
with the IP addresses used to download their pornographic movies. After receiving this
information, the defendants--through extortionate letters and phone calls--threatened the
subscribers with enormous financial penalties and public embarrassment unless the
subscribers agreed to pay a settlement, all the while concealing their collusion in the alleged
copyright infringement. When courts restricted their ability to sue multiple individuals in
the same lawsuit, the defendants shifted tactics. They filed lawsuits falsely alleging that
computer systems purportedly belonging to their sham clients had been infiltrated by
hackers, and then recruited ruse defendants against whom they brought these illusory
"hacking" lawsuits. Finally, when courts became suspicious of the defendants' tactics
and motives, the defendants began a long process of lies and deceit designed to conceal the
truth and deflect responsibility from themselves. In total, the defendants obtained
approximately. $6,000,000 made possible by the fraudulent copyright lawsuits they peddled
to courts throughout the country

I believe the $6 million number is new. But everything else in there we've covered in the past. The lawsuit names some people by initials only -- but who are easily identifiable if you've been following the saga. M.L. is likely Mark Lutz the "paralegal" who was involved in many of these cases, and was a figurehead owner of some of the sham corporations. You may remember him from one of the earliest Prenda stories we had, where Lutz "appeared" in court as a "corporate representative" of one of Prenda's "clients" and yet knew nothing at all about the company he was supposed "representing." That story also involved an appearance by John Steele who claimed he was there just observing, but which the judge immediately became suspicious about.

P.H. is likely to be Peter Hansmeier, Paul's brother, whose name has appeared at times in connection with the Prenda scam and had been described as the technology person tracking down who was downloading the files in question. The indictment also mentions P.D. who is obviously Paul Duffy, the official owner of Prenda Law, but who was always sort of the third wheel of the operation before dying just as all the mess was unfolding. A.C. is clearly Alan Cooper, named here as "an acquaintance of Steele," but who was a caretaker for some Steele properties, and whose signature Steele forged on documents pretending to own AF Holdings, one of the bogus shell companies he set up. B.G. is almost certain Brett Gibbs, a California lawyer who filed a bunch of Prenda lawsuits early on, but was one of the first to reveal details once judges started to catch on.

Perhaps the most interesting part of the indictment is it details multiple lies that Team Prenda told under penalty of perjury or under oath to various courts. It's a pretty long and detailed list. It includes filings by Mark Lutz and Brett Gibbs, which the indictment claims were all done, under penalty of perjury, at the direction of Steele and Hansmeier -- so they don't even get off for trying to keep their names off these documents.

Based on all this, they're facing a bunch of charges, for mail fraud, wire fraud, conspiracy to commit money laundering (involving the transactions to hide money from courts) and conspiracy to commit and suborn perjury.

As White rightly reminds us, an indictment is just a bunch of allegations, not yet proven, but having followed Team Prenda and all these actions for many years, the feds seem to have clearly figured out what was going on, and appear to have the evidence to back up many of those claims. Things don't look good for Steele and Hansmeier. According to the Minneapolis Star Tribune, US Attorney Andrew Luger called a press conference to announce all of this and call out the actions of Steele and Hansmeier.

"The defendants in this case are charged with devising a scheme that casts doubt on the integrity of our profession," Luger said in prepared remarks. "The conduct of these defendants was outrageous — they used deceptive lawsuits and unsuspecting judges to extort millions from vulnerable defendants. Our courts are halls of justice where fairness and the rule of law triumph, and my office will use every available resource to stop corrupt lawyers from abusing our system of justice."

Turns out that when you abuse the judicial system to shake people down... people aren't going to be too happy about that. Of course, now we have to wonder if the other giant copyright troll, Malibu Media, may be facing similar issues going forward...

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]]>shit gets realhttps://www.techdirt.com/comment_rss.php?sid=20161216/14262736298Fri, 10 May 2013 13:40:30 PDTJohn Steele: I'm Just A 'Business Development' Guy Who Has Nothing To Do With These LawsuitsMike Masnickhttps://www.techdirt.com/articles/20130510/12410823035/john-steele-im-just-business-development-guy-who-has-nothing-to-do-with-these-lawsuits.shtml
https://www.techdirt.com/articles/20130510/12410823035/john-steele-im-just-business-development-guy-who-has-nothing-to-do-with-these-lawsuits.shtmltalking a lot since then to the press. The latest is a long interview done with Joe Mullin at Ars Technica, where Steele, once again, seems to think he can talk his way out of anything.

There's so much ridiculousness in there. Let's hit just a few of the high points, but then go read the full interview to find your own favorite moments.

He talks about "battle-stations"? That tells you something about where this judge is coming from. In the same sentence he talks about attorneys having "moral turpitude," he uses Star Trek terms to describe it? It's really beneath the dignity of the court.

John Steele is talking about something that's "beneath the dignity of the court"? Really? Anyone who has followed his efforts would laugh at that line considering everything he's done that's way beneath the dignity of the court, which is why he's now in the position he's in with Judge Wright's ruling.

As for the needs of the many outweighing the needs of the few [a Star Trek quote at the top of Judge Wright's order]—that's not [how the legal system works]. If the needs of the few didn't matter, black people wouldn't vote in most Southern states.

Yeah, that's right, Steele, align your situation with American slavery. Your situation is so analogous to slaves picking cotton in the South. Judge Wright is just trying to keep you down, huh?

The deposition that [former partner] Paul Hansmeier gave wasn't even certified. It shouldn't have even been allowed to be used. There are hundreds of problems with this order in my view.

Note that he doesn't claim that Hansmeier didn't say everything that was said, which really helped show how screwed up the whole situation was. Just that it wasn't certified... tap dance, tap dance.

I—and others involved—have been in front of hundreds of judges. This is the first judge that has ever sanctioned anybody involved with Steele Hansmeier, Prenda Law, or whatever.

I think the judge knows we're going to appeal. He wrote that the sanctions were designed to cost just less than [an effective appeal]. Look, you may hate me and the litigation that's gone on in the past, but most people have to be a little nervous when a judge puts out a number and says that.

Uh, the whole point of that was to highlight the nature of Prenda's trolling scheme. To turn that around and suggest that that's a problem is hilarious. Steele seems to think that everyone in the world is a complete moron and he's the only one with functioning brain cells.

Steele: Not until I received an order to show cause. I've spoken to some of the other people [involved], and they're in a similar situation. I didn't know about this until February of this year. Until March I hadn't read a single pleading in this case. I, quite frankly, had never been involved in any case in California.

If there was evidence I was involved and [Prenda Law lawyer] Paul Duffy was involved in more than just the somewhat supervisory role of Brett Gibbs, then that evidence would have come out.

Ars: Brett Gibbs testified at the March hearing that you and Hansmeier were "senior partners" at Prenda Law. He says you were supervising. Were you?

Steele: No. Absolutely not. Where's the evidence that we supervised Brett Gibbs? Where are the e-mails?

Ars: Gibbs testified that you were in control of these entities. You ran them. You initiated cases, you settled cases.

Steele: Where are the documents showing that I own any of these entities? I've never even heard of a couple of them.

This exchange is amazing on so many levels. Let me summarize it: "I knew nothing! There's no evidence I knew anything!" "Um, there's direct testimony from the person who knows you were involved." "Where is the evidence on something entirely different?!" Nice one, Steele.

Steele really likes this "where is the evidence?" line to respond to actual testimony against him. He uses it multiple times, including about Alan Cooper's signature, where again, he chooses his words carefully:

I'm well aware Mr. Cooper said he never signed those documents. He said it was a forgery—those were words the court used. I'm very comfortable with the facts, and everything in my possession leads me to believe that Mr. Cooper's involvement with AF Holdings was different than what he led the court to believe. It will ultimately come down to a "he said, they said." Nobody I'm aware of, including myself, has ever forged Alan Cooper's signature. That is a pretty outrageous claim.

And for the love of God, where is the evidence [of forgery]? If someone had found something, it would be on the front page of Ars Technica and half a dozen other sites within minutes. There's no way any of that evidence could exist. Because it's not true.

Notice that he's speaking very specifically about the forgery aspect, and not about the misrepresentation part of it. Hmm... Also, Steele doesn't seem to understand that testimony is evidence. So, yes, there is evidence. It's called the testimony in the court by Alan Cooper.

And then we find out what Steele is now claiming his real role is in all of this:

I work part-time with Livewire Holdings, one of the entities that Lutz owns. My role is on the business side. I acquire other adult content companies and deal with expanding the holding company. The main goal is to handle a lot of content and websites and to be involved in the adult space. For that, I'm paid a flat fee. I won't say how much, but it's a modest flat sum.

Right. And that's why you showed up in court in some of these cases and Gibbs said you gave him specific directions on the legal issues. Because you're in "business development."

Steele: I think they've done a few cases. I'm not involved with that litigation. I don't file anything. You know, what pirates oftentimes don't get is that this is not a huge moneymaker. I know from past experience at Steele Hansmeier that over half the clients we got never made any money off suing pirates.

Ars: Well, how much money have you made? Last year a Forbes reporter suggested you could have collected $15 million in settlements, and you responded by saying the actual figure was "more than a few million." Have you made millions of dollars suing people?

Steele: I wish I had. At the time my wife made some joke wanting to know where I hid the other $14.5 million. There are a lot of costs associated with litigation.

Again note how he tries to answer a different question. He already told Forbes the $15 million number was too high. Mullin is asking him about the "more than a few million" he already told another publication was the correct amount. And he responds by talking about the $15 million. This is not how you honestly answer questions. It's how you (very weakly) try to avoid responding to questions that you don't want to answer.

Ars: If you and Paul Hansmeier don't run AF Holdings, why would Hansmeier be the person who was sent to be deposed about AF Holdings?

Steele: I believe he went out as a favor. They needed a corporate representative, and he was authorized to provide that, for AF Holdings, for Mr. Lutz. You want to have a strong corporate representative to get up and deal with Mr. Pietz for seven hours. There's not a whole lot of people in a typical adult content company that can answer a lot of the questions that were asked.

Heh. No one goes to be a corporate representative in a big legal dispute "as a favor." And nice gratuitous attempt to attack Pietz thrown in for fun. Also, I wonder which of the questions "not a lot of people in a typical adult content company can answer" he is talking about. What about the one of who actually owns the company you represent? That one?

Ars: And so what is Paul Hansmeier up to? I called him to talk about the order, and he referred me to you.

Steele: I believe he deals with some class action type of litigation. He also helps me when I'm looking for acquisitions, he's got experience in that area. So he works essentially part-time for Livewire. It's on a project basis.

Funny stuff. Of course, Hansmeier has been called out for very questionable class action objections which appear to involve objecting at the last minute to try to upset a settlement that's about to go through and then seeking cash to go away. In fact, there's a letter where Hansmeier directly promises to go away for $30,000.

Anyway, as mentioned there's even more in there that we didn't get to. I hope Steele keeps talking though. I imagine bits and pieces of his various statements are likely to show up in various court cases going forward as well.

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]]>keep-digginghttps://www.techdirt.com/comment_rss.php?sid=20130510/12410823035Fri, 22 Mar 2013 00:18:58 PDTPrenda Law Update: How Do You Serve An Alan Cooper Who Might Not Exist?Mike Masnickhttps://www.techdirt.com/articles/20130321/15420122409/prenda-law-update-how-do-you-serve-alan-cooper-who-might-not-exist.shtml
https://www.techdirt.com/articles/20130321/15420122409/prenda-law-update-how-do-you-serve-alan-cooper-who-might-not-exist.shtmlordered all of Team Prenda back to his court room on April 2nd, for what should be an entertaining hearing. Part of that order was a very explicit order to Brett Gibbs to serve everyone by the very next day, and to file proof of such service as of Monday of this week. Ken over at Popehat has the news on the proof of service explanation filed from Gibbs' lawyers, who appear to have (smartly) done everything they possibly could to serve everyone listed as carefully as possible.

Ken notes one interesting tidbit is that the lawyer, who showed up in court representing John Steele, Paul Hansmeier, and Paul Duffy, told Gibbs' lawyer, Andrew Waxler, that she was "unable to accept service" for those individuals. Ken's response:

Normally, if you were trying to avoid a federal judge's wrath, you'd be a little more cooperative than that. The refusal suggests to me that (1) they are trying to preserve their frankly specious lack-of-personal-jurisdiction argument, and/or (2) Steele, Hansmeier, Duffy, and the paralegal aren't cooperating with their counsel. You can stand on ceremony and insist on formal service, but all I can say is if Judge Wright were that mad at me, I'd want the proof of service to reflect that I happily accepted service to make things easier.

Another interesting question: how do you serve the "Alan Cooper of AF Holdings LLC" since most people are pretty sure that no such person exists? Well, here's how:

Service on "Alan Cooper, of AF Holdings LLC." The only "Alan Cooper" that we are aware of appeared in Court on March 11th. I understand that he claims that he is not affiliated with AF Holdings. We further understand that Mr. Steele may contend otherwise. In any event, since we know of no other Alan Cooper than the person that appeared in Court, I reached an agreement with his attorney, Paul Godfread, that I can serve "Alan Cooper" via email only care of Mr. Godfread's email address.... Pursuant to that agreement, we served Mr. Cooper c/o Mr. Godfread on March 15th. Mr. Godfread did acknowledge receipt of the email when he wrote back with the following remarks: "Please note that I do not represent Alan Cooper of AF Holdings. I only represent Alan Cooper of Isle, MN. I do not accept service on behalf of Alan Cooper of AF Holdings. I not agree to accept service on behalf of Alan Cooper of AF Holdings. Please also note that the most recent order specifically does not order my client, Alan Cooper of Isle, MN to appear."

Got that? So they serve the real Alan Cooper, who says he's not the fake Alan Cooper, and the judge has already made it clear that the real Alan Cooper need not appear. Steele may argue that these Alan Coopers are one and the same, but that's going to be quite a mountain to climb, convincing anyone that this Alan Cooper was actually a representative of AF Holdings.

As for the others? They served John Steele at his last known Florida residence (though I've heard he's moved elsewhere) as well as at a variety of different email addresses, though some of them bounced. They served Paul Hansemeir similarly, and after a number of bounced emails, did receive at least some sort of confirmation that a somewhat generic email address was "Paul's email address." As for Paul Duffy, they sent the letter to his last known address and email address -- which did not bounce. Paralegal Angela Van Den Hemel was similarly served, though somehow (it is not clear how) notified them that the email address they used is "no longer active." Mark Lutz -- whose name was remarkably absent during the first big Prenda trial (and who, unlike the others, appears to never have even replied to the original order) was also served similarly -- but they also left voice mails for him to get him to confirm his address. Lutz never returned the calls or acknowledged the emails, but not all of the emails bounced (same deal as with Peter Hansmeier).

For the companies, they just served the relevant principles: Duffy for Prenda Law and Steele Hansmeier, Lutz for Livewire, AF Holdings and Ingenuity 13.

At this point, it will be difficult for anyone to claim they were not properly served, but I wouldn't be surprised to see them try.

Either way, given their reactions to date, I'm curious how many people are actually going to show up in court on April 2nd.